THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

HOWARD KURTZ, CNN ANCHOR: It's been 14 days now since Anita Dunn fired the first shot in the White House war against Fox News, right here on this program. And yet the story is still going strong. Administration officials convinced they have found a useful target, and Rupert Murdoch's network practically reveling in the criticism.

Now, there's a media drum beat that's developing that the assault on Fox is really an effort to whip the rest of the news business into line, and that President Obama is trying to demonize all of his political opponents.

One thing at least is clear. The White House isn't backing down and Fox is fighting back with all its firepower.

(BEGIN VIDEO CLIP)

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: It's really not news. It's pushing a point of view. And the bigger thing is that other news organizations like yours ought not to treat them that way. And we're not going to treat them that way.

KATIE COURIC, CBS NEWS ANCHOR: We've never seen anything quite as intense as the feud between President Obama and the Fox News Channel.

BERNARD GOLDBERG, FOX NEWS CONTRIBUTOR: I think it's a twofold strategy at work here. And that is to convince or intimidate, whatever word you want to use, the other news organizations, the so- called mainstream news organizations, that Fox is not only illegitimate and not to be taken seriously, but that they, the so- called mainstream news organizations, shouldn't run with any story that Fox runs with.

SEAN HANNITY, FOX NEWS ANCHOR: The administration doesn't want to hear what we have to say. They want to silence us. They want us to shut up. They want us to get in line. They don't want people asking them the tough questions.

GLENN BECK, FOX NEWS ANCHOR: This isn't about Fox News. Sadly, the other news organizations know that and they're silent anyway. They've either become such cowards that they're willing to play along to get along, or they're enjoying their new role as lap dogs for this administration, rather than watchdogs for the republic.

(END VIDEO CLIP)

KURTZ: So has the war on Fox backfired on Obama and company? And should other journalists be getting a bit nervous? Joining us now, Nico Pitney, national editor of the "Huffington Post," Jane Hall, professor of media at American University, and Amanda Carpenter, who writes the Hot Button Column for the "Washington Times."

Amanda Carpenter, is the White House trying to isolate Fox News and makes other news outlets embarrassed about following Fox stories.

AMANDA CARPENTER, "THE WASHINGTON TIMES": It's pretty clear they are. You've seen essentially a talking point go all the way from the deputy communications person all the way to Barack Obama, that Fox News is not a legitimate news organizations. If you look at their statements, that's what they've all been saying, as you said, over the last 14 days.

And I think it is backfiring, A, because it's an attack on the media. And two, other networks -- this is such a big story, other networks have to cover it.

KURTZ: The president this week in an interview likened Fox News to talk radio. Nico Pitney, we heard Hannity say there that they want to silence us, they want us to shut up. Anybody muzzling Fox News?

NICO PITNEY, "THE HUFFINGTON POST": No. Although I agree with Amanda, the White House is taking on Fox News. And it's exactly the right thing to do. If the Republican National Committee had a television network, how would it be any different?

And Fox admits it. You've got the senior vice president of programming --

KURTZ: Wait a second. Fox says that they have reporter who cover the news, and they have opinion guys, like O'Reilly and Hannity and Beck.

PITNEY: Occasionally, they slip up. And you have the senior vice president of programming say, in an interview, that Fox News is the voice of the opposition. I mean, they only -- they parade as objective journalists. And some of them do good journalism. But, by and large, the network is a 24-hour campaign against the administration.

KURTZ: I want to come back to that point. Let me turn to Jane Hall. You were a Fox News contributor for 11 years. What do you make of the administration's argument that it's not really a news network?

JANE HALL, AMERICAN UNIVERSITY: I think you do have to differentiate between their commentators and their news. I don't think this is a good strategy for the Obama administration. I personally think they've made a point. Now move on. Put Obama on O'Reilly. Go on Chris Wallace' show. I think they look like whiners.

I think that it is fair to say that Media Matters, the liberal watchdog group, did a compilation tape that does show that there has been a campaign to say Obama was a socialist, a communist, a racist, on news, as well as on commentary.

KURTZ: When you appeared regularly on O'Reilly, were you there as a token from the dreaded MSM?

HALL: Well, I was there as a defender of the MSM. And you wouldn't believe how many famous journalists I talked to, who said better you than me. Let me tell you my side of the story. They didn't want to come on.

It is hard to do, because it was like, when did you quit beating your wife. That was usually the question. But I felt it was worth doing.

KURTZ: Do you consider yourself a liberal?

HALL: No.

KURTZ: You were paired with Bernie Goldberg, the conservative point of view, who wrote a book about the media's slobbering love affair with Barack Obama?

HALL: Right.

KURTZ: So was that a fair pairing, to have someone who has that point of view, and you? You consider yourself a journalist.

HALL: I consider myself a journalist. I'm now able to say opinions because I'm a professor. I consider myself a moderate. In that universe, I was probably considered a wacky professor by O'Reilly. He would sort of pat me on the head and say, now, Jane, I know you liberals feel this way. And I'd say, I'm not really a liberal.

So, yes, there's not necessarily a left/right comparison on there.

KURTZ: Amanda, why shouldn't the Obama White House push back against what it sees as unfair coverage, just as the Bush White House did when it used to criticize MSNBC, occasionally the "New York Times" and others.

CARPENTER: I think every politician has the right to push back against what they perceived as being unfair. What they're doing, they're acting like they don't know the difference between the news page, and the editorial pages, the news programs and the editorial programs, at Fox News.

When you have Robert Gibbs saying, I think you should watch the 5:00 or 9:00 hour to see how biased they are. Those are clearly opinion shows.

KURTZ: Beck and Hannity, yes.

CARPENTER: They're acting like they don't know the difference. I think it's just convenient for them, because they need an enemy. There's no longer Bush. There's no longer Cheney. They tried it against Rush Limbaugh. Now they're trying to make it Fox News.

PITNEY: I think there's so much evidence that the news programming also has a slant. And it's not just a political. It's factual and not factual. You have a Fox News anchor saying that falsely -- and the facts are out there when he says it -- that a gay Obama administration staffer is covering up statutory rape. That goes so far beyond the line. And it's not -- it's not -- it's about a war on the administration.

CARPENTER: They act like other networks, MSNBC -- you're inviting Rachel Maddow and Keith Olbermann to off the record parties, to talk with them, to act like there's not this going on in other networks. Look at the Rush Limbaugh quote that everyone reported and ran with.

KURTZ: Let me jump on this off the record lunch. OK, Olbermann and Maddow were there, very liberal fire brands for MSNBC. And other liberal columnists were there, Maureen Dowd of the "New York Times" and Gene Robinson of the "Washington Post," and some straight reporters as well, including CNN's Gloria Borger.

How is that different from George Bush -- and all presidents do this -- bringing in Fred Barns, Bill Kristol, Rich Lowry, Charles Krauthammer for off the record or background chats.

CARPENTER: I think that is fine.

KURTZ: You brought it up as this great talking point.

CARPENTER: If you had Olbermann, he declares people the worst people in the world. And then to say it's so horrible when Rush Limbaugh is tough on the presidency, well, you accept it from Keith Olbermann. That's not OK.

HALL: I think this has become a talking point for the Fox analysts, Karl Rove, Pat Buchanan, who was part of the Nixon administration, going after the press, saying this is Nixonian. It is not Nixonian to go after --

KURTZ: One of the reasons, I think, that the Obama White House is losing at least the PR war on this is that a number of liberal columnists have said this is not a smart strategy. Clarence Page today says he agrees with Hannity, almost never agrees with Hannity, on this. Ruth Marcus of the "Washington Post" used that phrase Nixonian. So when you have people on the left, opinion people on the left saying that the Obama administration is not helping itself with this, that's got to give you some pause.

PITNEY: There are people in mainstream outlets that take a very sanctimonious approach. That's fine.

KURTZ: Sanctimonious? Why is it sanctimonious?

PITNEY: I think there are so many -- again, from an online outlet, there are tons of folks who write for online publications that can't get press credentials at Congress or the White House. There are lots of journalistic flaws that no one complains about.

KURTZ: You're saying it's all an establishment club? PITNEY: No, but I think part of it is. You know, I mean -- go ahead.

HALL: I think it's a mistake because you cannot beat Fox News at their own game. Roger Ailes --

KURTZ: What is that game?

HALL: Which is to be combative, to take what people say. Their ratings are higher than they have ever been. I think it's not a smart strategy for them to do it. I think you put your people on the shows, where you think they'll get a shot. You don't whine. You get out there and you powder them.

PITNEY: I think the Obama administration has to go after them, but I agree with you about the Nixonian element. Dana Perino admitted the other day that Bush administration froze out MSNBC toward the end of their administration. But the most memorable quote is from Ari Fleischer, when Bill Maher, a comedian, not a journalist, made a crack about 9/11. He said, at the press briefing, "this shows that Americans have to watch what they do." That is Nixonian. And that was to a comedian, not a reporter.

CARPENTER: The reason why this is a mistake is because they're attacking the free press. You don't go after the press. People who realize this is attacking the free press, which is why Jake Tapper asked the question, who are you to decide what is a legitimate organization? It is not the White House's job.

KURTZ: ABC Jake Tapper asked Robert Gibbs that question at a White House briefing. And you had this other incident this week where there was a pool situation. Five networks sometimes share cameras to share the cost as well. And the treasury department in an interview with Ken Feinberg, the pay czar, tried to exclude Fox News. The other networks wouldn't stand for it. The administration backed down. The White House apologized.

KURTZ: It seems to me that some journalist from other organizations have now said this has gone too far.

HALL: Again, that's why I think it's a bad strategy. They've got ABC defending Fox. They've got other networks saying wait a minute. Wait a minute. We're more with these guys than we are with you.

KURTZ: What about Jake Weisberg of "Slate," writing in "Newsweek Magazine," says that Fox is un-American and that legitimate journalists should refuse to go on?

CARPENTER: That's his opinion. He's being proven wrong.

KURTZ: Does that offend you?

CARPENTER: Well, it's his opinion. He can think and write whatever he wants. I believe in free press.

KURTZ: Did you feel like you were being used to give Fox a certain degree of legitimacy, coming on as a media professor?

HALL: No, I didn't. The reason I left was in part because they've had less debates than they used to. It is a fair point to say how much debate is there on MSNBC? How many Republican strategists? We have a bifurcation of the media.

KURTZ: Wait a second. The reason you left is because you feel they have less debate than they used to. In other words, it used to be "Hannity and Colmes," now it's just Hannity. It used to be Bernie and Jane. Now it's just Bernie.

HALL: I think there's less debate than there was. And I'm also, frankly, uncomfortable with Beck, who I think should be called out as somebody whose language is way over the top. And it's scary.

KURTZ: Was that a factor in your decision to leave Fox?

HALL: Yes, it was.

KURTZ: Let me give you my two cents here. This is also polarizing. You either have to take the position that Fox is a courageous news organization or a threat to western civilization.

I have criticized things that O'Reilly has said, that Hannity has said. Certainly, on this program, I told Glenn Beck that he was being offensive with words that he had for a Muslim member of Congress.

At the same time, I don't think an entire organization should be judged by a few commentaries, any more than I think it is fair to judge CNN by the things that Lou Dobbs says. Look at some of the people at Fox. I wrote down some names here. Major Garrett used to work at CNN. Bill Hemmer used to work at CNN. Greta Van Susteren used to work at CNN. Chris Wallace used to work at ABC and NBC.

Did they all drink the Kool-Aid when they went there? Sometimes, Fox's reflexive opposition to Obama bleeds into his news coverage, as you were saying, Nico. But I don't think it's fair to tar everyone with the same brush. You want to take that on?

PITNEY: I think you paint it a little too moderately. Take their flagship news program "Special Report With Brett Baier." George Mason did a study, 80 percent of the coverage is negative.

KURTZ: Toward Obama?

PITNEY: Toward Obama.

KURTZ: Is that on the opinion round table?

PITNEY: No. Just the first 30 minutes.

CARPENTER: Have we had a particularly rosy year so far in terms of the economy? Would you expect it to be 80 percent favorable?

PITNEY: No. If you talk about fair and balanced, this is not fair and balanced in the news coverage. It's not just Beck and Hannity.

CARPENTER: I think we've had a lot of bad news this year.

HALL: I think you raise a very good point. I made that point, too. I think Chris Wallace and Major Garrett, there are a lot of very good people there. And it's not a black and white universe. Unfortunately, we're living in a parallel universe, where you either hate or love one media outlet. I don't think that's a good thing.

KURTZ: You can do it to MSNBC. They have liberal hosts. Although they do have Joe Scarborough.

PITNEY: Call me when Fox has three hours of programming given over to a Democratic Congressman or a former Democratic Congressman. This is just not comparable.

KURTZ: I want to throw in one more political wrinkle here that happened this week. President Obama sat down with NBC's Samantha Guthrie. And among the various topics they discussed was the fact that there's been some basketball games at the White House, which only guys have participated. Let's take a look at the question and the answer.

(BEGIN VIDEO CLIP) SAMANTHA GUTHRIE, NBC NEWS CORRESPONDENT: You could say that this was just a game. You might say it was a networking opportunity with the president, or some kind of political activity. Some people might look and say gosh, there's the old boys' club again.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have to say I think this is bunk.

(END VIDEO CLIP)

KURTZ: I agree with the president. I think it's bunk. You don't get it. But we'll ask the women.

CARPENTER: As a former college athlete, I think it's a little bit bunky. You know? They're playing a basketball game. I guess they needed to invite Kathleen Sebelius, because she was a former basketball player, to make it fair? I think they were playing ball. Maybe she'll come out and have a horse game.

KURTZ: -- White House is kind of a boys club any more than any other White House? What do you think?

HALL: I've heard that from some people who are looking at it. I think it's a fair question. Is it symbolic or is it not symbolic. He can answer it and say it's bunk. It's a fair question to ask.

KURTZ: I don't remember a lot of women chopping wood with George Bush. Let the guy have his basketball game. There's plenty of other things to criticize him about. Let me get a break here.

Coming up, I should say, the media salivates over another affair involving a TV guy and a subordinate, this time at ESPN.

But first, whacking Wall Street; the Obama team slashes salaries for the top brass at bailed out companies. Are the media cheering the move?

(COMMERCIAL BREAK)

KURTZ: Sometimes the way the media frames a story tells you all you need to know. When it comes to the big Wall Street banks and other companies that took big federal bailout bucks, well, there's not a whole lot of public sympathy. Look at the way the network newscast reported what the Obama administration did this week and the very different perspective from Fox News.

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC NEWS ANCHOR: Payback time in the corner office. Some big executives at companies that got big tax dollars are about to have their salaries cut, and not by choice. COURIC: Taxpayers all over the country were outraged when they heard that companies they helped bail out turned around and gave their executives huge bonuses. And now the Obama administration is about to take action.

NEIL CAVUTO, FOX NEWS ANCHOR: A 90 percent pay cut. Forget a political enemies list, is the White House about to announce a financial one?

(END VIDEO CLIP)

KURTZ: Jane Hall, payback time. I'm not going to defend these clowns at these investment banks who ran the economy into the ground. But the underlying message in some of those newscasts and the stories, these SOBs deserve to have their pay slashed.

HALL: I think the networks are trying to be populist. They know where the popular sentiment is on this. Joe Nocera, a wonderful financial columnist for the "New York Times," said there are problems with this. It doesn't look as good. When you look at it, maybe it's such a good idea. There's more of a debate on that than maybe they reflected.

KURTZ: Is there another side that ought to be emphasized?

CARPENTER: Yes, I think all of the networks have bought into the fact -- what I think is a populist band-aid. The underlying problem is that the government hasn't fixed the problems with the bank. There's a lot of the same management structure in place. And we're covering the bonus cut story as if it's the story. Let's look a little bit deeper about what the administration has done or hasn't done to fix the underlying problems.

KURTZ: But big executive pay and bonuses, not tied to how companies are performing, many people think that is a major chunk of the story.

PITNEY: Yes, I think it is. You can hit Katie Couric for being too populist.

PITNEY: On the other hand, did a report make note of the fact that Goldman Sachs, Morgan Stanley, some of these other major firms are completely exempt from the rules that the pay czar is going to make? You know, it really is -- there are different ways of looking at it, of course. But I think Americans do care about it. And they care about it in the way that Katie Couric was talking about.

HALL: This is one thing people can get their minds around. My house is being foreclosed, and these guys who got us into this are still making millions. And they are still going to be making millions. It's not like the White House has told them to take no money. They'll still be making millions.

KURTZ: So far the companies that got so much publicity, so many headlines, it's just for the rest of 2009. We don't know what will happen in 2010.

HALL: And they're still coming home with five million dollars, most of these guys. They're still making a lot of money.

KURTZ: I think it is an important story. But there is a sense of payback, the word that Brian Williams used. I'm not singling him out. But I didn't sense the usual challenging atmosphere the way this story was reported. Everyone was saying, right on, let's get those guys.

CARPENTER: The clip you showed, you have Katie Couric talking about it's payback, and Neil Cavuto saying it's a pay cut. You can kind of see where the anchors are coming from. Cavuto -- there are people that are worried that this is an overreach of the administration, and that they're meddling to much inside the banks a year after the takeovers. Other networks are saying right on, cut their pay. It's just how the different networks handled this story.

KURTZ: Go ahead.

PITNEY: I think you're right that it shouldn't be payback, because the people who -- the smart people who believe in executive pay, reforming how we compensate these executives, it's not about payback at all. It's about making our capitalistic system work.

KURTZ: All I'm saying is let's have all sides of the story. Amanda Carpenter, Nico Pitney, Jane Hall, thanks very much for joining us.

Coming up in the second half of "Reliable Sources," the press gets punked. Still smarting from the Balloon Boy hoax, reporters show up for a phone press conference in Washington. Why do we keep falling for these scams?

Plus, affairs in the Internet age; from divorce papers to a creepy letter from the mistress to the guy's wife, to a frantic 911 call. Is an ESPN's analyst's affair leaving us with a bad case of TMI.

(COMMERCIAL BREAK)

KING: I'm John King and this is "State of The Union." Here are stories breaking this Sunday morning.

Terror in the streets of Baghdad after two powerful car bombs killed more than 130 people. Officials say the bombs went off in quick succession this morning near two Iraqi government building. More than 500 people were wounded.

Afghan President Hamid Karzai's political rival says he will not join the Karzai government if the incumbent wins the country's upcoming runoff election. Speaking on this program earlier this morning, Dr. Abdullah Abdullah said his mission is to change the country for the better, not be part of, quote, the same deteriorating situation. The runoff between the two candidates is set for November 7th.

President Obama has declared a national emergency to deal with the rapid spread of the H1N1 Flu. The administration says that declaration allows the government and hospitals to cut through red tape, and to speed up the process of treating patients. Health officials say more than 1,000 people in the United States have died from H1N1.

Those are your top story here on STATE OF THE UNION.

KURTZ: It is my sad duty to inform you that the American media have once again been punked. No balloons this time, just a plain, old Washington news conference held at the National Press Club. And it sure sounded newsworthy. That's why CNBC and Reuters and the "New York Times" and "Washington Post" websites went with the story.

(BEGIN VIDEO CLIP

UNIDENTIFIED MALE: Trish, from the U.S. Chamber of Commerce, a news release basically saying the U.S. Chamber of Commerce is now getting ready to throw its weight behind strong climate legislation.

UNIDENTIFIED MALE: -- U.S. Chamber of Commerce. This is not an official U.S. Chamber of Commerce event. But this is a fraudulent press activity and a stunt. May I see your business card.

UNIDENTIFIED MALE: Can I see yours?

UNIDENTIFIED MALE: Are you here representing the U.S. Chamber of Commerce?

UNIDENTIFIED MALE: Yes, I am.

(END VIDEO CLIP) KURTZ: The bogus presser was staged by the Yes Men, a left- leaning activist group that has conducted fake events before. So between that and the big balloon melodrama, why do journalists keep falling for this stuff? Joining us from Los Angeles, Sharon Waxman, founder and editor in chief of the entertainment website, TheWrap.com. And here in Washington, Mark Feldstein, professor of journalism at the George Washington School of Media and Public Affairs.

Mark Feldstein, if you're CNBC, if you're a reporter at that network, how do you go on the air with a major story about the Chamber of Commerce changing its position on global warming without making one phone call?

MARK FELDSTEIN, GEORGE WASHINGTON UNIVERSITY: Well, in a warp speed world of cable news, 24/7 and Internet and Twitter competition, the premium is on speed, not accuracy sometimes. I think the business channels particularly feel that pressure even more than those of us in general news, because whatever they say can move the market.

KURTZ: Like that.

FELDSTEIN: Almost instantly.

KURTZ: Sharon Waxman, I have a little sympathy for the reporters who were there. You go to a news conference. It's at the National Press Club. There's a podium. There's a mike. It seems kind of legit and yet, of course, it wasn't.

SHARON WAXMAN, THEWRAP.COM: Yes. I don't think that we can put this in the category of other things that the press might have fallen for. When you have a source who goes out and deliberately tries to mislead reporters, then what are you going to do? When somebody lies to you, and when they're at the National Press Club, I think you definitely have to always have your skeptical hat on. It's not April Fool's Day or something, you know?

So I think the bigger story is, of course, if this does move the market, and then you immediately have not only the immediacy of television, but, of course, the viralness of the Internet, which means that if Reuters says it's true, then CNBC's probably not going to question it, and neither did the "Washington Post" and "New York Times." That's kind of the proof. Those are the sort of more skeptical news organizations that are out there. And it's immediate.

So within a minute of it going out, it can be up and out to the rest of the world. I think that's the danger of the kind of news world that we live in.

KURTZ: Yes. Yet there have been other examples, Mark Feldstein, of people who have put out phony press releases about companies and it has moved the stock, sometimes dramatically so. So it's not like we've never been through this before. And I'm wondering whether it's just become too easy to exploit this instant news culture that you referred to.

FELDSTEIN: That's right. Media is so ubiquitous now that everybody is a media critic. And now everybody is a media manipulator. It used to be just politicians and governments, you know, fake weapons of mass destruction and the White House that did this.

FELDSTEIN: Now even the amateurs are able to trick the media, and the media -- and play to the institutional weaknesses, speed, visuals for television, cable news that has 24 hours to fill, the voyeurism of watching a kid in a well or whatever.

KURTZ: Right. And yet, I just keep thinking, you know, all anybody had to do was pick up the phone and call the public relations office of the Chamber of Commerce just to get an initial comment or something, and you would instantly know that this wasn't happening.

But Sharon Waxman, you mentioned, you know, newspapers perhaps, you know, being a less instantaneous form of news delivery, and yet in this culture where everybody's got to go live, they also have to blog or throw something up on the website. In other words, it used to be the New York Times wouldn't have to do the story until the next day, and now you are expected to do the story in five minutes. Isn't that playing into this?

WAXMAN: It's not just that, because I've been at events like this, and I can tell you, the way that you're now reporting the stuff, I'm not sure if this is the case at the National Press Club, but certainly whenever I'm at a live event or one of our reporters is at a live event, we're not only writing something that could go out live to an editor or sometimes gets put up live. We're tweeting it. We're shooting it. We're shooting flip (inaudible) that gets uploaded immediately. So a tweet will go out and people will pick it up and re-tweet and re-report that the second -- literally, three seconds -- after it's out of the person's mouth.

So you're talking about at this press club event, you actually have somebody from the chamber, the actual Chamber of Commerce there who was there to challenge the guy, right? But even that would take 10, 15 more minutes (inaudible)...

KURTZ: Too late. 10, 15 minutes? We haven't got 10, 15 minutes. All right. There's no more dramatic example obviously of the media getting hoaxed in a very public way than with this balloon story, and, you know, that became this huge cable melodrama.

Last Sunday, just a few hours after we went off the air on this program, Sheriff Jim Alderden had a press conference out in Colorado. Let's pick up a little bit of what he had to say, both about the hoax and the media.

(BEGIN VIDEO CLIP) SHERIFF JIM ALDERDEN, LARIMER COUNTY, COLORADO: It has been determined that this is a hoax, that it was a publicity stunt. I personally have to say I feel very bad, and I think we came up and bumped against the line of misleading the media.

(END VIDEO CLIP)

KURTZ: Because he originally had said they were taking it seriously even though they had doubts. Now you have the wife of the Heene family, Mayumi Heene, in an affidavit saying yes, they knew all along the son was hiding and was not in the balloon and all of that. That didn't get much coverage. Do you detect any embarrassment, Mark, on the media's part for having been swept away by this phony balloon scam.

FELDSTEIN: Oh, there is a certain shamelessness that the media perpetually has that makes it tough, sure. There's egg on the face, but, you know, as you say, it goes back to, you know, the Hitler diaries, the Clifford Irving hoax. In the 1830s, there were maybe the first media hoax when a newspaper ran a sketch of winged creatures on the moon. So it does go back a while. It is hard if someone is going to deliberately trick you. The police were investigating. The media has that justification, but it does get back to the old saw that some stories are too good to be true and too good to check.

KURTZ: Sharon, you know, whether it's the runaway bride or runaway balloon, I think a lot of people have figured out that the bar is pretty low for getting something on the air. And now of course after we found out that there has never been a 6-year-old boy in that helium balloon, everybody was chasing the wacky family, Richard Heene became America's villain. So we just kind of moved on to the next step, didn't we?

WAXMAN: Yes. I think there is two culprits here that really occurred to me as I note that we continue to talk about this story a week after it's happened. The first is -- I mean, I really see the reality-show culture as being a major element of this, because here you have this obscure family out in the middle of Colorado understanding that they can find their way onto television by, you know, a hoax, basically, or by some spectacular stunt that involves making their 6-year-old lie, which I find unbelievably reprehensible myself. But anyway, I mean, I think that's one of the real lessons out of this. It used to be everybody needed their 15 minutes of fame, now everybody's 15 minutes on a reality TV show (inaudible)...

KURTZ: So let me follow up on this. You say that the people who put on the reality shows and the people who watch them and this whole culture that has built up about watching ordinary people, you know, eat worms or swap wives or whatever it is, is in a way to blame, is encouraging the Richard Heenes of the world?

WAXMAN: I think -- oh, absolutely. Well, first of all, it's now all become clear that this was a stunt for him to try to get a reality show, and he'd been on a reality show before. I'm sure he sees something like a train wreck like "Jon & Kate Plus 8" and thinks, well, we're kind of cute, why can't we do it? And it's really very much that sense of being able to find your way onto the world stage for the purpose of getting rich and famous.

And the other part of it, of course, is the news media. And I was actually more forgiving of the cable stations than a lot of people were, because I feel like when you have a story like this...

(CROSSTALK)

KURTZ: Oh, yeah. You had to show it. You had to show it. We didn't have (inaudible).

WAXMAN: You have to show it. But on the other hand, you know, it is part of the whole distraction nature of what's going on. I mean, there were really important things going on in the news. There was actually a fantastic "Frontline" show this week that was a deep investigation into the origins of a financial scandal. People aren't talking about that. They really would much prefer to talk about the jiffy pop bag and the Heenes.

KURTZ: And you know, Mark, the reality show culture -- and it is what it is and people like it, I guess, or they wouldn't get the ratings -- it just then bleeds over into the news segments, and then you have, you know, "The Today Show" covering Jon and Kate. Who is going to get the Jon interview? Who is going to get the Kate interview?

FELDSTEIN: In those infotainment culture, the entertainment is trumping the information. And, you know, this is a for-profit business, and as long as CNN and other networks are rewarded financially because more people tune in to watch a balloon boy than to hear about financial derivatives, this kind of stuff's going happen.

Up next, outing the analyst. A top ESPN baseball commentator apologizes for a messy affair with a young co-worker after his wife finds out. Is it shades of David Letterman all over again?

(COMMERCIAL BREAK)

KURTZ: David Letterman, it turns out, isn't the only one who's been fooling around with the hired help. ESPN baseball analyst Steve Phillips is off the air on the eve of the World Series after a sex scandal that's been all over the New York tabloids. Phillips has admitted having sex with a 22-year-old production assistant -- you see her there -- named Brooke Hundley. And in a twist that some folks are likening to Glenn Close's role in "Fatal Attraction," Brooke Hundley repeatedly called Phillips' wife, drove to her Connecticut home, smashed into a stone column before speeding away. New York Post also published a letter that Hundley wrote to Phillips' wife Marni, saying the TV commentator hasn't been honest with you, and even describing one of his physical characteristics.

So has this sort of behavior become acceptable in the television world and the sports culture? Joining us now from Cincinnati, Gregg Doyel, columnist for cbssportsline.com. And here in Washington, Amy Argetsinger, co-author of the "Reliable Source" gossip column for the Washington Post.

Gregg Doyel, Steve Phillips gets involved with this 22-year-old aide and he's allowed to take a leave of absence. Does that suggest to you that ESPN isn't taking this all that seriously?

GREGG DOYEL, CBSSPORTSLINE.COM: No. No crime has been committed. So what are they supposed to do? Here in the media, we always get on coaches about, hey, you didn't -- you got a player who was accused of this or that or that, and those are crimes and you're letting him play this week. Well, I mean, Steve Phillips was accused of having sex with a woman of legal age. You know, the biggest deal is that she's not very pretty.

KURTZ: She's not just some woman. She's a subordinate who works at ESPN. He's acknowledged having the affair with her. That part is not in dispute.

DOYEL: Yeah, no, I don't see anything -- I don't see grounds for dismissal, if that's what you're asking, no.

KURTZ: OK. Well, let me read a statement that ESPN gave us, so we can put it up on the screen. "We were aware of this," says the sports network, "and took appropriate disciplinary action at the time." Not saying what that action is. "We granted Steve's request for an extended leave of absence to allow him to address it. We have no further comment." Amy Argetsinger, is this becoming a routine kind of story, TV people in entertainment or sports just helping themselves to young women on the staff?

AMY ARGETSINGER, "RELIABLE SOURCE" COLUMN: I don't know. I think it remains to be seen. You have to think that the Steve Phillips case breaking when it did, it's like a gift to the rest of us in the news media. People are fascinated by the Letterman case. People want to keep talking about it, want to keep writing about it, but there have been no new developments. The Steve Phillips case comes along, and enables us to think of this, is this a trend? Is this a larger culture thing? It gives us more opportunity to talk about these issues, and honestly, will probably encourage more similar stories to come out.

KURTZ: Really?

ARGETSINGER: Possibly.

KURTZ: People don't want to get this kind of publicity. They don't want to be in your column as harassing some young woman.

(CROSSTALK)

KURTZ: She took out a restraining order...

(CROSSTALK)

ARGETSINGER: We saw this with the Letterman case. Once this story about Stephanie Burkitt broke, then you have the other intern talking to TMZ about what happened 10, 15 years ago. Something like this encourages other wronged parties...

KURTZ: It certainly makes them famous, right? We never would have even heard... ARGETSINGER: Not necessarily the thing you want.

KURTZ: Or infamous.

Gregg, you know, when these sports scandals erupt, everybody piles on Kobe Bryant or the basketball coach Rick Pitino. Not seeing that much written in the sports pages about this particular episode, juicy as it is. Are many sports writers afraid to take on ESPN, basically because they want to get on its programs?

DOYEL: I wouldn't know about that. I mean, sports writers are in general afraid of a lot of things, so it wouldn't surprise me.

Look, the only reason this has moved the dial at all is not because of who Steve Phillips is. He's really small potatoes. He's a former GM of the Mets, now is a big deal, but right now he's nobody. He's one of a million guys talking about baseball on TV, big deal. The reason this moved the dial is that the woman is by all accounts very, very ugly on the inside, allegedly, and she's gone Glenn Close in "Fatal Attraction" and she's hired people to make phone calls, and she's stalked the kid -- the -- Steve Phillips' kid. This is news because of her. I mean, Steve Phillips is not news. Sorry, Steve Phillips, you're not a big deal. But this girl right here, she is a big deal, and not for good reasons.

ARGETSINGER: Well, truly not for good reasons, and there's been bad behavior on all sides here. But I think, you know, this seems to be the grounds for a sexual harassment complaint or investigation at ESPN. It's a young, young, young production assistant who he took up with very, very quickly. A lot of people were able to make excuses and apologies for Letterman because they take a very French mentality. Oh, this is a longtime affair, a close friend, they like both of these people.

KURTZ: Right.

ARGETSINGER: This seems much more exploitative.

KURTZ: Well, Brooke Hundley actually says in a complaint that she filed to get a restraining order that she told her supervisor about this and was told to just get used to it. And also, you know, Gregg mentioned that Steve Phillips had worked as general manager of the New York Mets -- where, it turns out, he was sued for sexual harassment by a young woman who he acknowledged having an affair with and that was settled out of court. So you begin to wonder how these people keep getting new jobs.

ARGETSINGER: You begin to wonder about that.

KURTZ: Well, let's pick up your point, Gregg, about Brooke Hundley and the various things she did. One of the things she did I mentioned at the top was to drive to Marni Phillips' home in Connecticut, and that prompted a 911 call. I want to play a little bit of that for the viewers right now.

(BEGIN VIDEO CLIP) MARNI PHILLIPS: I have a crazy woman who is involved with my husband, and she's come to my house to harm me and my children. She has been threatening me via text and phone calls.

OPERATOR: Did anything happen when she showed up?

PHILLIPS: I was -- I was out. And when I pull in my driveway, she was on the side of my driveway.

(END VIDEO CLIP)

KURTZ: Gregg, Phillips' wife sounds kind of terrified there. Why does Brooke Hundley still have a job at ESPN?

DOYEL: Well, that's a good question, and what she really has to worry about, Brooke Hundley, I think is she's the one that can go to jail some day for some of the things that have happened, I think. I'm not a lawyer, but that's what I would guess.

It does take a lot to move the dial with the media now with the sex scandals, because we've all seen them so many times. If you're the governor of South Carolina, for example, and you pretend you're on the Appalachian Trail, that will move the dial. If you have sex with a farm animal, that will move the dial. Or in this case, if you have sex with a girl who stalks the wife and stalks the kid, and also is not very photogenic -- I mean, Google searches are going nuts on this whole story because people want to see what she looks like, and they're not impressed.

KURTZ: The New York Post has been pretty mean, referring to her as the tubby temptress and things like that.

DOYEL: Well, you know what...

(CROSSTALK)

KURTZ: Go ahead.

DOYEL: She's so ugly on the inside -- normally we don't go there, and I don't want to go there -- look at me, I'm bald, I'm old, I got a crooked nose. I mean, who am I, but...

KURTZ: I wasn't going to point that out, Gregg.

DOYEL: Yeah, it's pretty obvious...

(CROSSTALK)

ARGETSINGER: Would we be giving everyone a pass, though, if she had not lashed out, if she had, you know, ended up in a mental institution or jumped off a building or something like that?

DOYEL: Yeah, we would have used code words like you poor thing, bless your heart, and I'm sure she has a really nice personality. But I'm sure she doesn't have a really nice personality, and therefore I don't feel bad pointing out what's obvious. I mean, the reason why this is in the news, the biggest reason, let's be honest, the biggest reason this is in the news is because she's not real good looking.

KURTZ: Let's talk about the digital age. You can go to the Huffington Post or any website, and you can click your mouse and you can hear that 911 tape, and you can look at photos of Brooke Hundley, you can look at the divorce complaint, you can look at that letter that she wrote to Phillips' wife. Has the digital age really kind of transformed gossip and scandal into the point where we now can see everything?

ARGETSINGER: We can now see everything. I mean, I got an e-mail the morning the story broke in the New York Post, from a friend saying, you have to write about this Steve Phillips case. I confess, my response was, "who is Steve Phillips?" Her response was, "I don't know, but this is fascinating stuff." It's a soap opera. It's a telenovella. And we have all of the sordid details to sift through on our own.

KURTZ: Did you take the advice? ARGETSINGER: And write about it? Absolutely. It's the story everyone's talking about. It's -- it would almost be compelling if he weren't famous at all.

KURTZ: Right. And of course, in today's television culture, people have a way of getting famous really quickly when stuff like this comes out. And it's kind of sad, but I do wonder what will happen with his employment at ESPN. All right, Gregg Doyel, Amy Argetsinger, thanks very much for helping us out this morning.

After the break, how TMZ's Harvey Levin found himself under law enforcement scrutiny and how he's fighting back.

(COMMERCIAL BREAK)

KURTZ: TMZ is the place to turn for the latest gossip on Britney Spears or Lindsay Lohan or Jon and Kate, but suddenly it's become a symbol of something very different.

(BEGIN VIDEO CLIP)

KURTZ (voice-over): When you think of press freedom, you think of the battle over Daniel Ellsberg leaking the Pentagon Papers to the New York Times. You think of Richard Nixon going after Katherine Graham and the Washington Post. You think of Judith Miller going to jail in the Valerie Plame leak case. You wouldn't automatically think of this guy, but TMZ founder Harvey Levin is embroiled in a First Amendment battle royale, and it stems from his first worldwide scoop at the web site, which is owned by CNN's parent company.

When Mel Gibson was arrested for drunken driving in Malibu three years ago, the L.A. County Sheriff's Department held back the crucial details until Levin reported that the actor had unleashed a profane, anti-Semitic tirade. That prompted Sheriff Lee Baca to launch a new investigation into who leaked the internal documents to TMZ.

Now we're hearing that the sheriff's office secretly obtained a search warrant for Levin's cell phone records, tracing his calls in an effort to identify his source. Some of those calls went to the arresting sheriff's deputy, James Mead (ph), and the county D.A. got a separate warrant for Meade's bank accounts to see if any TMZ cash ended up in there. It didn't.

(END VIDEOTAPE)

KURTZ: Levin told investigators he didn't pay for the Gibson scoop, and prosecutors have decided against charging Meade, but imagine being a journalist and discovering that investigators had seized your records from the phone company and you didn't even have a chance to contest it. Levin told me this is an outrage, a frontal assault on the First Amendment by a sheriff's office seeking revenge. The sheriff's office says it was following the law and that the search warrant was approved by the judge. But some legal experts say that using a search warrant against the journalist, unless the journalist is, say, suspected of being a bank robber, is a violation of federal privacy law.

Now, it's illegal, of course, to leak confidential law enforcement information, but that stuff about Gibson's tirade was stripped out of the arrest report by supervisors and should have been public in the first place. As for Harvey Levin, you may or may not like what TMZ does, but he deserves the same legal protections as the New York Times, and in this case involving a bad boy movie star, Levin's rights were trampled.

Still to come, why being a fake, a fraud and a scam artist isn't necessarily a bad thing. Really. You've got to check this out.

(COMMERCIAL BREAK)

KURTZ: It was during the fall campaign that a number of news outlets, MSNBC, the L.A. Times, the New Republic rushed to quote an unnamed McCain adviser as trashing Sarah Palin.

(BEGIN VIDEO CLIP)

DAVID SHUSTER, MSNBC: Who did tell Fox News that Palin could not identify the countries involved in NAFTA and that she thought Africa was a country instead of a continent? It turns out it was Martin Eisenstadt, a McCain policy adviser who has come forward today to identify himself as the source of the leaks.

KURTZ: Eisenstadt identified himself as a Washington think tank guy and all-around pundit.

"MARTIN EISENSTADT": I'm excited to be back in my home city of D.C. Those people who say I don't exist -- well, here I am. I have a CNN interview later. I'm going over to the RNC to speak to Steve Schmitt (ph) right now.

KURTZ: And here's what I said on this program last November.

(BEGIN VIDEO CLIP)

KURTZ: But Martin Eisenstadt is a fake, a fraud, a scam artist.

(END VIDEOTAPE)

KURTZ: Amazingly, he's just come out with a book. "I Am Martin Eisenstadt," which is a pretty neat trick in light of the fact that he doesn't exist. We were talking about hoaxes earlier. This guy was a concoction of two filmmakers, Dan Mirvish and Eitan Gorlin. And look at this, right here in the right -- here in the left-hand corner of the cover, a blurb, "Martin Eisenstadt is a fake, a fraud, a scam artist. Howard Kurtz, CNN." Talk about there being no such thing as bad publicity!

Can you believe this? I denounced the guy as a lying snake, and he's using me to sell books! That is -- the people behind him are using me to peddle this thing. Well, at least they quoted me accurately. Amazing.

And as I turn things back over to you, John King, this Sunday morning, we talked earlier this hour about President Obama playing basketball at the White House with a bunch of guys, and the New York Times this morning asking, "does the White House feel like a frat house?" Saying that male advisers are more influential and call each other "dude." So what do you think, dude?

KING: Dude, the White House is pushing back pretty hard on this one, saying look at the senior staff and look at the total staff. It's about 50/50. Our Dan Lothian did a smart piece on this yesterday. Howie, here's my prediction. The champion, WNBA champion, Phoenix Mercury, all women. I'm getting -- I am going to bet you that they get a little chance on the White House basketball court relatively soon.

KURTZ: A bit of a photo-op. Well, I think that it's fair to judge the president on who he surrounds himself with, but let the guy have his hoops games. I think this is a bit of a bogus media issue. All right, John, take it away.

KING: Take care, Howie. Have a great Sunday. I'm John King and this is "State of the Union."